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These days, consumers can obtain everything from newspapers to meal kits to credit monitoring services through subscriptions. The prevalence of these services, and the ease with which consumers can sign up, have gotten the attention of regulators who are concerned that some negative option marketing might confuse or trick consumers. The CFPB, FTC, and state AGs have been particularly vocal about practices they deem “dark patterns,” and continue to focus on the area.     

Today, the CFPB put out guidance warning covered companies and service providers that “dark patterns” surrounding negative option marketing violate the Consumer Financial Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices. As the circular makes clear, the CFPB has already brought enforcement actions alleging deceptive practices around negative options (see this case against a consumer reporting agency, and this case against a company that provided registration and payment services to organizers of events and races). The announcement also notes that the CFPB’s approach to negative option “dark patterns” is generally harmonized with that of the Federal Trade Commission (the FTC put out its own Enforcement Policy Statement Regarding Negative Option Marketing in October 2021). The guidance highlights the need for companies using negative option marketing to ensure that consumers: 1) understand the material terms of the negative option; 2) provide informed consent before being charged; and 3) are able to easily cancel recurring charges.

Continue Reading Regulators Continue to Focus on “Dark Patterns” in Negative Option Marketing

By now, most of our readers have likely heard about the FTC’s proposed rule to ban noncompete clauses in employment contracts, including from Kelley Drye’s other posts on the topic discussing the sheer breadth of the proposal and the potential implications for employers.  In this post, we zero in on an issue that merits a lot more attention than it’s getting – namely, the serious legal and practical questions that the FTC’s proposal raises.  

Brief recap of how we got here and what the rule would require

This is the first of many rulemakings that the FTC has said it will launch based on its supposed authority to issue rules banning “unfair methods of competition” (“UMCs”) under the FTC Act. Notably, starting with a statement of regulatory priorities submitted to OMB in December 2021, the FTC has said repeatedly that it may launch multiple competition rulemakings based on this authority (as well as multiple consumer protection rulemakings based on its Magnuson-Moss authority, which it has done). More recently, the FTC issued a policy statement taking an expansive view of what’s an UMC, so the scope of the FTC’s intended reach here could be very broad indeed.   

Continue Reading The FTC’s Proposal to Ban Noncompetes is on Shaky Legal Ground